Hi Ben

I am not really sure what you mean. If you have equity as an individual, then the trust could borrow funds from you, or even use those assets as security.

If you are concerned about asset protection, then you cannot really just trasnfer the equity into your trust without selling the property to the trust. But you could let the trust take a 2nd mortgage over the property. So if you were ever sued, the trust would be owed the remaining equity and this may be out of reach of creditors if done correctly.

Terryw
Discover Home Loans
North Sydney
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Hi again

I have not had any problems in getting loans with a trust. Even ANZ did them at 95% LVR with LMI on top and no extra fees. Even in my work as a mortgage broker, I have never seen a lender that had a problem with trusts – except for certain lenders on their low doc products:
Suncorp, ANZ and ING generall will not lend to companies or trusts on their low doc loans, but will on full doc.

I personally would not use the structure Rob mentioned as companies are not entitled to the 50% discount on capital gains. But if the company is not trading, then it is unlikely to be sued.

Terryw
Discover Home Loans
North Sydney
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Lozza

about 30% of my LOs have not continued. That means I got the property back empty – but also got the gains that have come with it as well as the postive cashflow in the meantime. And if you re LO it, you would get another option fee, a higher rent and a higher strike price.

The cashflow on my LOs and Wraps worked out about the same.

Another point, if you are looking for long term cashflow and don’t want the tenant to cash you out, you can stipulate that the option is only able to be excerised after X years.

Terryw
Discover Home Loans
North Sydney
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They don’t usually give them out. I know of one bank that gives them to the broker, and that is ANZ. Other smaller lenders can also be talked into give you access too.

Terryw
Discover Home Loans
North Sydney
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Orion

This is usually the case. Just have a look at your trust deed to confirm.

Terryw
Discover Home Loans
North Sydney
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Luke, I think you could probably make even more money on LOs then wraps for the following:
-Can have a fluctuating strike price, whereas with wraps the wrappee’s ‘strike price’ is constantly decreasing.
-Tenants are more likely to leave then with a wrap – resulting in you retaining more money as you would not refund any equity
-Less tax problems, ie no CGT at the exchange or contracts.
-You could still borrow any equity on a LO and use this for more pruchases.

There must be many more reasons too, but this is just off the top of my head.

Terryw
Discover Home Loans
North Sydney
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Trusts really don’t work with wages as the ATO classes this as personal exertion income and even if you use a trust, they will deem the individual to have earned the money themselves and tax them as individuals.

I don’t think their is much you can really do in this situation.

Terryw
Discover Home Loans
North Sydney
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John

You can get around using your home as security (directly anyway) but setting up a redraw facility and taking the deposit from that account and then the rest from the main commercial loan.

I don’t do many commercial loans, but you might find it more difficult getting loans in regional areas, so they may ask for a lower LVR. Try Bankwest and Citibank.

Terryw
Discover Home Loans
North Sydney
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Anibus

on a $250,000 loan at 6.45% over 30 years, IO would save you about $53 per week.

I would say, if you have undeductible debt, then use IO for ivnestments and put the extra off this debt. If not, then it doesn’t really matter that much, but using IO loans means you can afford to service more loans initially.

Terryw
Discover Home Loans
North Sydney
[email protected]

If you have equity or deposits, then you can usually get finance somehow –

I would use a broker and try for standard loans first, then try for low docs, then no docs and then even private lenders as a last resort.

Terryw
Discover Home Loans
North Sydney
[email protected]